VAT is a consumption tax levied on goods and services in many international jurisdictions. The national tax systems of Europe, Canada, Japan and Australia allow for a refund of VAT to most non-resident business entities worldwide. For VAT not related to travel and entertainment, registration for VAT may be required in order to get a refund, and in some cases registration must be done prior to the business transaction.

Most registered businesses, subject to VAT (or equivalent tax), are entitled to VAT refunds. However, the VAT refund rules vary significantly from country to country in terms of the rates/expense items eligible for refund etc. and are very complex. If your business is based in the EU and VAT registered in your home country, you can qualify for a refund. Non-EU based organizations must be registered for business in their own country, to qualify for a refund. Some restrictions apply for specific sectors (public institutions, financial services) or for countries where there is no reciprocity agreement in place with the country of expenditure.

Current European regulations only allow VAT recovery for registered business entities. There is a separate refund system available for goods, not services, purchased for personal use, either directly with the merchant or at exit points from the EU.

Non-EU resident tourists can, in most cases, apply for a refund of the VAT paid on gifts and merchandise bought for export out of the country. The refund should be requested at the last port before departure from the EU.

Refund rules vary from country to country. The main types of recoverable expenses fall within the following categories:

• Hotel and Meals
• Car Rental & Fuel
• Taxis & Public Transportation
• Conferences and Tradeshows
• Professional Fees & Marketing
• Inter-Company (travel delegations, services, seminars)
• Import VAT, Logistics and Warranty Products
• Drop-shipping, Installations and Maintenance contracts
• Telecom and Network Services
• Research and Development
• TV and Motion Picture Production

A claim has to be filed with the local tax authorities, usually in the local language. For non-EU entities, the original invoices must be submitted with the claim, including signed refund forms.

You will need to provide expense documentation in the form of original invoices and receipts together with the back-up expense reports and/or credit card statements where relevant. Depending on the agreement, the document extraction can be undertaken on-site by the client or by Global Tax Reclaim’s expert retrieval team.

Global Tax Reclaim can prepare and take care of all necessary documentation. Claims which involve a non-EU entity have different documentation requirements; in particular invoice originals are required. A “Certificate of Taxable Status” will also be required for non-EU entities, which is proof that the company is registered for tax in its own country. It is available from your principal Tax Authority. In some countries this Certificate is issued either by your Tax Authority or Business Registration authority. In some Middle East countries it will be issued by your local Chamber of Commerce. Please note that the Certificate will be valid for twelve months from the date of Issue, so you will only need to submit it once a year. A valid “Certificate of Taxable Status” must be an original, (photocopies, faxes, or emailed certificates will not be accepted by the Tax Authorities).

Global Tax Reclaim has a strong commitment to data security. All client data is processed at our secure Head Office in Dublin. All invoices and records are returned to you upon completion of the claim. If we remove invoices from your files for reclaim purposes we will insert stamped copies in their place. This will ensure the integrity of your financial files for audit purposes.

As Global Tax Reclaim can undertake the total reclaim process from start to finish, there is no need for you to commit any resources.

Global Tax Reclaim projects’ vary significantly depending on the volume of transactions relating to each client. However the average time-scale to complete our internal processes pre-submission to Revenue would be one to two weeks from extraction of the relevant invoices. Once we have submitted the various claims, your client log-in will facilitate tracking of all claims until refunded by the various Revenue authorities.

VAT rates and refund eligibility vary from country to country. For example, VAT rates for accommodation services (hotel room) range from 4% to 27%. Estimates of the VAT refund potential can be done and Global Tax Reclaim can provide your company with a free estimate.

There are very strict deadlines imposed by each tax authority.

Businesses based in EU – The deadline for submission of claims is 30th September of the following year.

Non-EU based businesses – The deadline for submission of claims is 30th June of the following year.

UK (non – EU claimants) – The filing deadline for VAT refund claims on expenses incurred in the United Kingdom between July 1 of each year and June 30 of the following year is December 31 of this year (this deadline is only applicable for companies located outside European Union countries).

Generally, VAT refunds must be granted within 4 months. However in reality refund can vary from one week to one year in some instances depending on the country of refund and on the quality of the claim documentation provided.

The eligibility of VAT refund for bookings made through a TMC is not guaranteed.

In cases where the TMC applies a mark-up and then re-bills the service to your company (TOMS scheme), VAT is not refundable.

If the TMC is simply consolidating payments but hotels still directly invoice your company, VAT is refundable (local exceptions apply).

VAT refunds are issued in the currency of the country where the expense was initially incurred. Global Tax Reclaim can if required arrange to convert all refunds into a single currency and provide you with one consolidated refund.

VAT is normally charged by the vendor in Europe if they shipped goods to a location in Europe. To reclaim this, VAT registration in one of the EU countries is likely required.

If an entity conducts business, such as selling goods or services within the European Union, that may require VAT registration with the local tax authorities. VAT registration should be done prior to the business activity if possible. However, in some cases it can be done retroactively. VAT registration means that the non-EU company is required to:

1. Register for VAT in the European country where the business activity takes place.
2. Charge VAT on all or some of the invoices issued to the customer.
3. Deduct most of the VAT incurred from the European vendors. If a company does not register when required, the VAT incurred from the European vendors is not refundable.

Once a company is registered for VAT, it will have to file VAT returns on a regular basis. In some countries, the VAT registration may lead to permanent establishment status or other liabilities. Upon completion of the business activities, the company can de-register for VAT. Examples of business activities that may require VAT registration are:

• Importing of Goods
• Drop-shipping of Goods
• Electronically Supplied Services to Private Persons
• Conferences and Tradeshows
• Installations and Maintenance Services
• Global Contracts
• Telecom and Network Services